FHA City Water And Sewer Hook-Up Requirement

By
Real Estate Mortgage Broker with George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut NMLS #65149

Most of the streets here in Middletown, CT, have city water & sewer.  However, there are still a number of streets that the homeowners never hooked-up to the city water & sewer, and continue to be on wells and/or septic systems.  Because these homeowners have never hooked-up to the city water & sewer, Buyers who later want to purchase the property with FHA financing run into a problem.  The problem is with the FHA City Water And Sewer Hook-Up Requirement.  FHA will require the Buyer to hook-up to the city water and sewer before the loan can close.  For many FHA Buyers this is a problem, because many FHA Buyers tend to have very little money for downpayment and Closing Costs, much less money  to hook-up to the city water and sewer.

FHA recognizes this, and therefore, will make an exception.  If the cost to hook-up to the city water and sewer exceeds 3% of the selling price, FHA will allow for a hardship waver.  The Buyer will be required to obtain quotes from a licensed plumber or a General Contractor that is licensed to that that type of work, and if the quotes exceed 3% of the selling price, FHA will wave the requirement that the Buyer hook-up to the city water and sewer.  This waiver is usually easy to obtain on a lower price properties, because the 3% of the selling price is easly exceeded, but on properties that are closer to the upper FHA loan limits this can be a big issue.

That is why when a Buyer applies for a FHA Loan with me, and I recognize that the street is one of the streets that I am aware of that this could be a potential issue, I immediately advise them to have their Realtor check to see if the property is still on well & septic.  If it is I tell them to be pro-active and to obtain quotes for city water and sewer hook-up.  By doing this we can save several days in getting Loan Commitment, and eliminate a lot of stress and frustration.

 

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Who To Call For Your Mortgage Needs In Connecticut:

George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308  gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.

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Topic:
ActiveRain Community
Location:
Connecticut
Groups:
1st Time Buyers
Mortgages
Realtors®
RESPA
The FHA Mortgage Group
Tags:
fha city water and sewer hookup waiver

Comments 10 New Comment

Rainmaker
691,088
Ann Hayden
SelectAnn.com
Prudential Select Properties-St. Louis Missouri

George,

WOW!  I never knew that!

Ann Hayden in Wildwood, MO

September 17, 2011 10:45 PM
Rainmaker
695,110
Debra Walsh
Hudson Valley NY Real Estate 845.928.8000
Keller Williams Realty

Where we are is pretty much ALL well and septic except in the towns. 

September 18, 2011 01:24 AM
Rainmaker
932,608
Nick T Pappas
Madison & Huntsville Alabama Real Estate Resource
Assoc. Broker/Broker ABR, SFR, e-Pro, @Homes Realty Group, Huntsville AL

George, my home in Illinois is on well and septic, but I can pretty much guarantee it will be for a long time. Good info for folks looking in border areas.

September 19, 2011 07:33 PM
Rainmaker
578,613
Barbara Altieri
REALTOR - Fairfield County CT Real Estate
RealtyQuest, Fairfield and New Haven County CT Homes for Sale and Real Estate

George -- Your being proactive when you recognize a street that will be an issue is very impressive.  By doing so, that truly shortens the timeline for approval and also cuts down on some of the anxiety for the buyers. I will just bet you have many many clients who can't thank you enough for being so on top of FHA requirements.

September 19, 2011 09:35 PM
Rainmaker
365,276
Russell & Tracy Lee Parker
Experienced Property Managers Since 2006
RE/MAX Dallas Suburbs

Good to know information abuot FHA.  I will keep this in my back pocket in case I ever need it. Happy New Year!

January 03, 2012 01:39 PM
Ambassador
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George Souto

Your Connecticut Mortgage Expert
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